Taking $50k, $75k — or More(!)
Off the Last Asking Price
Overpriced listings have a way of coming down to earth, and Buyers who can afford to be patient can often pick up the property at a (much) better price once the Seller has become more realistic.
Of course, Buyers who wait risk that the Seller will in fact accept a lower price ” today ” from another Buyer.
Which is why I typically counsel my clients to go ahead and make an offer on a home they really like.
In my experience, the only way to really find out a Seller’s bottom line is to present them with an actual, written offer (vs. a hypothetical, “would you take $x for your home?”).
–Ross Kaplan, “Waiting for the Price to Drop — or Not” (11/4/2011)
The home pictured above — on Basswood Road just west of Cedar Lake in Minneapolis — came on the market around Labor Day at a list price of $695k (tax assessed value: $884k).
Three weeks later, the price dropped to $599.9k.
Then, in mid-October, the listing went “Pending.”
Fast forward a month to last Friday (11/18), when the sale closed and the price became public; guess what the Seller ultimately got?
Yup, almost $100k(!) below the last asking price.
How much do you want to bet other Buyers would have expressed interest if they knew the real asking price was $500k, not $600k?
So, why would the Seller drop so much in one fell swoop, instead of testing an intermediate asking price (like $550k)?
One possibility is that the home had a major inspection issue — or several of them. See, “Did the Home Have Inspection Issues? How to Tell.”
However, at least anecdotally, it seems that such “private” price reductions are more likely to occur when two factors are present:
One. Estate or long-time owner.
In turn, this is usually associated with three things: a) the home’s condition is quite dated; b) there’s little or no mortgage, so the owner can sell for less; and c) the proceeds are being divided by several family members, some of whom may be out-of-town and may not know local prices — or care.
Two. Difficult Comp’s.
A unique property that’s been off the market for decades can be harder to find Comp’s (“Comparable Sold Properties”) for.
In such a situation, determining fair market value is more challenging — and the price range is necessarily wider.
Bottom line in this case?
Based on what I know of the home and neighborhood . . . the Buyer got a helluva deal!